A new chapter for cryptocurrencies begins Sunday night as bitcoin, the most mainstream digital asset, launches on futures markets. The milestone will open up the market, allowing investors to bet against the currency without actually owning it. Author Nolan Bauerle at the news site CoinDesk joins Hari Sreenivasan for more.

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HARI SREENIVASAN:

Earlier this year, on NewsHour Weekend, we brought you a story explaining cryptocurrency, the digital assets that are not tied to any one country or bank, and the technology beneath them called blockchain. But suffice it to say, whether people understand what they are or not, there are a lot of speculators betting on their success that has driven their valuations through the roof in the past year. Tonight is an important milestone in cryptocurrency because a traditional futures market, which allows someone to bet on an underlying asset without actually owning it. will add bitcoin to the list of things investors can put real money against. Joining me now here in the studio is Nolan Bauerle, an author at CoinDesk. Does this mean that financial institutions and markets will take Bitcoin seriously?

NOLAN BAUERLE:

It means as a product – that they can access easily. Until now you actually have to own Bitcoin or use one of the Bitcoin cryptocurrency exchanges that have started up in the ecosystem over the past couple of years.

HARI SREENIVASAN:

And you have to be a little nerdy to know that and do it!

NOLAN BAUERLE:

It's not as hard as some people make it sound but it is definitely a new experience and this will allow all these financial institutions to get exposure to Bitcoin using markets and exchanges they're used to using.

HARI SREENIVASAN:

OK. So you know in the past when you think of futures markets, I mean I think of the movie Trading Places. We're talking orange juice prices and pork bellies and all this kind of stuff. Does this mean that Wall Street takes this seriously enough on the same level as oil and pork and all these other things you can bet on?

NOLAN BAUERLE:

I think it does indicate they've gotten over that psychological gap when people think of things that are digital. They think of them as ephemeral not limited. That's what bitcoin did. They made something that was natively and inherently digital, property. It did that by the orchestration of technologies and the result is that something that's digital can now be limited it has counterfeit protection and it can act as property.

HARI SREENIVASAN:

The giant question that you get at the Thanksgiving table of the Christmas table. What is this really worth? Who's standing behind it? There aren't blocks of gold as somewhere in Fort Knox that stand behind this currency?

NOLAN BAUERLE:

Because it is the first piece of digital property you can think of, as the first piece of digital real estate and it's beachfront. When people realize that there are only 21 million bitcoins they wanted a piece of that property. To understand a bit about how it is, you can think of the tree falling in the forest thought experiment. If a tree falls in the forest and a million computers record that tree falling and they have a protocol between them to vote on whether or not that thing happened the tree fell. You can be sure the tree fell. So that's how it created digital property you had all these computers working for authentication and authorization in the system that's the miners. They get paid in bitcoin by providing these services to the networks so it's attracted a tremendous amount of computing power and that computing power called the hash power is what helps prove that these pieces of property exist. You'd have to convince all of these computers that this doesn't exist. There are more there's more computing power in the bitcoin network than almost all the banks in the world combined.

HARI SREENIVASAN:

One thing I want to make clear is just because the futures markets are covering it doesn't necessarily mean that we're going to see a positive outcome. Markets are what markets are they measure sentiment. So I have no idea and neither to you I guess one whether people are going to say this should be worth more or it should be worth less right?

NOLAN BAUERLE:

And that's been one of the beautiful things about bitcoin! Until now, all the price has been determined by price discovery. What someone is willing to sell a bitcoin for, what someone is going to buy a bit coin for. So that's where we've arrived at the number that we have today. Certainly there is speculation around it but when people look at this idea that they have a tremendous hash power, there's tremendous security around this network. They realize that this is a limited piece of digital property and they want some.